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Act 82 Energy Diversification Act

Act 82 Energy Diversification Act

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Published by: g4nz0 on Jan 31, 2011
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(P.S. 1519)
ACT NO. 82JULY 19, 2010
o create the “
Puerto Rico Energy Diversification through Sustainable and AlternativeRenewable Energy Policy
lay down rules to foster the generation of renewableenergy, in accordance with short-, medium-, and long-term compulsory goals, known asthe Renewable Portfolio Standard; create the Puerto Rico Renewable EnergyCommission as the identity in charge of overseeing compliance with the RenewablePortfolio Standard hereby established and clarify its duties; clarify the duties of theAdministration of Energy Affairs in relation to the Commission and the RenewablePortfolio Standard; and other related purposes.
Puerto Rico, as many other jurisdictions, is facing an energy crisis that affects us all. Thatis why we need to establish concrete measures to deal with this problem and foster thediversification of energy production in Puerto Rico, establishing long-term energy conservationand stability. To achieve such diversification, we need to draw up a new energy strategy forPuerto Rico, along with rules to foster the generation of sustainable renewable energy, inaccordance with short-, medium-, and long-term compulsory goals, through a RenewablePortfolio Standard.Puerto Rico currently produces nearly seventy percent (70%) of its electric power fromoil. The cost of oil increases every year, and estimates are that it will continue to increase.Moreover, the excessive use of oil-derived energy sources contributes to the volatility of energyprices in our jurisdiction and to the climate change phenomenon that greatly concerns PuertoRicans. Though climate change is a global phenomenon, our current energy policy undoubtedlycontributes to it. Thus, the Government of Puerto Rico has the obligation to create the necessaryconditions for future generations to be able to progress and develop in a healthy environment,while creating both the necessary tools to stabilize energy prices and new sources of economicdevelopment.
The Government’s obligation to foster Puerto Rico’s sustainable development is not a
new matter. On the contrary, it is set forth in the very Constitution of Puerto Rico adopted in
1952. Section 19 of Article VI of the Constitution provides that: “[I]t shall be the public p
olicy of the Commonwealth of Puerto Rico to conserve its natural resources as efficiently as possible and
to develop and utilize them to their full potential for the general benefit of the community...”
Although this constitutional principle has served as a basis for various government programs andmeasures, a lack of concrete objectives to guide us toward achieving this goal has left PuertoRico lagging behind in terms of energy policy. The reality is that we are not exploiting or
developing our natural resources to their full potential for the overall benefit of our community.The reasons for this are not unknown.
Puerto Rico’s energy policy has
remained one-dimensional over the past sixty (60) years.This is one of the reasons energy costs on the island are among the highest and most volatile, incomparison with other jurisdictions. Puerto Rico has no control over the price of fossil fuels.Thus, our economy is subject to the constant fluctuation of world market prices and to the flightof local capital to purchase such fuels. In fact, it is estimated that the current cost of electricpower in Puerto Rico is twice as high as the average cost of electricity in the rest of the UnitedStates, and that the average Puerto Rican pays approximately twenty (20) cents per kilowatt-hour(kWh). Furthermore, it has been determined that this increase in the cost of electricity that PuertoRico has experienced is primarily due to a rise in the cost of petroleum-derived fossil fuels.The high cost and instability of energy is not only detrimental to our quality of life andour environment, but also to our economic competitiveness, as it increases the cost of doingbusiness in Puerto Rico. It is estimated that every dollar increase in the price of fossil fuel perbarrel results in a flight of capital of seventy million dollars ($70,000,000) from our economyevery year. The fact that our great dependence on oil makes the economy of the Nation to whichwe belong dangerously vulnerable, given energy instability, flight of capital, climate change, anda greater risk of attacks from U.S. enemies is of concern to other states also. That is why thePresident of the Unites States, Barack Obama, has pledged to invest $150 billion dollars insustainable renewable energy technology over the next decade. It is estimated that this willgenerate five (5) million direct and indirect jobs for the U.S. economy in upcoming years. InPuerto Rico
case, we estimate that if we increase sustainable and alternative renewable energyproduction, pushing new legislation such as this one, we will be able to create a robust, newrenewable energy industry and thousands of new direct and indirect jobs.
Renewable Portfolio Standard
At present, twenty-nine (29) states, along with Washington DC, have adopted the conceptof the renewable portfolio standard, while five (5) other states have set
renewable energy
 that they have pledged to fulfill. Compulsory goals to reduce the use of conventional energy andincrease the use of renewable energy are known as a
Renewable Portfolio Standard
 In fact, the United States Congress is evaluating legislation that, if passed, would establish anationwide renewable portfolio standard. Pursuant to this, and in order to take the preventivemeasures necessary to ensure compliance on our part, this Act establishes a system of goalssimilar to those currently proposed in the Renewable Portfolio Standard that may be imposed bythe federal government. In order to achieve an energy policy rooted in the principles of sustainable development, many countries have adopted policies that promote the use of sustainable and alternative renewable energy sources and establish the specific percentages of renewable energy that companies selling electricity must produce or consume.In keeping with this trend, this Act creates for the first time in Puerto Rico a RenewablePortfolio Standard and lays down specific requirements and percentages of electricity fromsustainable and alternative renewable energy sources that the Puerto Rico Electric PowerAuthority (PREPA) and other retail energy providers must provide over the next twenty-five (25)
years. The purpose being to achieve a twenty percent (20%) sustainable renewable energyproduction in Puerto Rico and to dramatically reduce our dependence on fossil fuels for energyconsumption. Furthermore, this shall
open the path for the “
Puerto Rico:
Green Island” initiative
,which seeks to establish and implement Puerto Rico
new energy policy, the fundamental aimof which is energy source diversification and conservation. This shall guarantee affordable,viable, reliable, stable and sustainable energy production in our jurisdiction, while creating
green jobs
and helping to preserve the environment.To this end, the members of the Energy Policy Committee
) created by GovernorLuis G. Fortuño, through Executive Order of July 21, 2009 (Administrative Bulletin No. OE-2009-23) reached a unanimous agreement on a proposed renewable portfolio standard anddefined the minimum percentage of renewable energy to be produced in Puerto Rico over thenext decades. The EPC did this in compliance with its assigned task of preparing andrecommending to the Governor a proposed renewable portfolio standard with specific goals andmetrics to diversify energy sources. Thus, the EPC agreed that the percentages of sustainablerenewable energy to be produced in Puerto Rico shall be twelve percent (12%) by 2015 andfifteen percent (15%) by 2020. This is without a doubt an unprecedented achievement for PuertoRico.The aforementioned proposal, as well as the other components of this Act, shall beimplemented by the Puerto Rico Renewable Energy Commission, and the Administration of Energy Affairs shall act at the operational arm of the Commission and shall implement theCommission
decisions, determinations, orders, resolutions and regulations. The Commissionshall be comprised of seven (7) members, namely, the Executive Director of the Administrationof Energy Affairs, the Secretary of the Department of Economic Development and Commerce,the Chairman of the Government Development Bank, the Secretary of the Treasury, theChairman of the Planning Board, one (1) representative of academia and one (1) representativeof the private sector. The representatives of academia and the private sector shall be nominatedby the Governor of Puerto Rico, with the advice and consent of the Puerto Rico Senate, and shallhave a four (4) year tenure. The Commission shall be chaired by the Executive Director of theAdministration of Energy Affairs. All of the aforementioned officials shall be appointed adhonorem.As in the case of many other states, adopting a Renewable Portfolio Standard will benefitPuerto Rico in more than one way. Such a standard will allow us to establish an energy policyless susceptible to fuel cost fluctuations, which would otherwise be impossible as long as fossilfuels and oil derivatives continue to dominate our energy production. Using more renewableenergy sources to produce electricity and foster greater conservation will allow us to betterstabilize our energy prices. It will also allow us to import less oil for our energy consumption,and thus reduce the tragic flight of capital from our economy. Furthermore, this will lead to thecreation of more jobs in Puerto Rico. One of the major costs associated with the production of electricity through renewable sources is the cost of the equipment and the costs associated withthe maintenance and operation thereof. The fact that these costs are more predictable and stableallows us to guarantee more stable prices over long periods of time.Moreover, reducing our dependence on petroleum-derived fuels to produce energy entailsbenefits that go beyond our economy. The production of electricity through alternative and

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